January 31, 2021
I have to admit that I can’t get very excited about the Robin Hood versus Wall St. brouhaha. As a former retail brokerage branch manager, I try to look at these things somewhat dispassionately. My first takeaway is that someone is going to get hurt, and I really don’t have any sympathy regardless of who it is. This is not about investing, or stealing retiree pension funds. This is about a bunch of sophisticated wise guys getting their comeuppance at the hands of a digital mob that has not yet discovered the principle of gravity. They are all playing a very dangerous zero sum game of chicken. There are good people on both sides, but that has nothing to do with it.
The old adage about investing wisely is to “buy sheep and sell deer.” The hedge funds have taken this advice, and turned it on its head. They are vultures, who create their own carrion. James Chanos made shorting popular years ago when he shorted Enron, and made a killing as the employees got killed. The reality is that shorting stocks is an institutional strategy that retail investors eschew. It is too arcane and risky for most individuals. So let both the buyers and sellers beware. The market has a tremendous capacity for overcorrecting. Robin Hood stole from the rich, but Little Red(dit) Riding Hood got eaten by the big, bad wolf.
The Spin Doctor 